Banks 'quick to pass on interest rate rises'

Aussie banks have been quick off the mark to increase savings interest rates on their online savings accounts, some pundits have noted.

Industry commentators have observed that many banks have boosted the cash rate on their products, including Harry Senlitonga, senior financial analyst at Canstar, who spoke to the Australian.

He pointed to the company’s research that shows on a minimum balance of $10,000 in an online account the highest rate on the market is currently offered by Ubank, a subsidiary of National Australia Bank, at 5.46 per cent.

Some institutions are offering rates two per cent higher than that set by the Reserve Bank of Australia, resulting in high interest savings and a competitive market, Mr Senlitonga explained.

"You wouldn’t see that . . . a couple of years ago," he said.

Choice spokesperson Christopher Zinn countered his remarks by claiming the banks’ behaviour has not changed much in this cycle.

"Banks are far faster at passing on interest rate changes where they are the direct beneficiaries," he stated.

When it comes to people being motivated to put money in their bank accounts, they are more likely to do so if they have an emotional incentive, according to ANZ research.

This article is brought to you by Mozo – Helping you compare savings accountsADNFCR-1761-ID-19477040-ADNFCR